Bitcoin futures: Short squeeze and stablecoin shift

Bitcoin futures open interest has dropped to multi-month lows. Crypto-margined positions are down to 12%. Over $570M in liquidations, mainly shorts, triggered a short squeeze and price rebound as traders favor stablecoin collateral.

Bitcoin futures markets have seen a dramatic shift, with crypto-margined open interest dropping from nearly 100% in 2019-2020 to just 12% today. This change reflects a strong move toward stablecoin-backed collateral, which helps reduce margin loss risk during price declines, even as leverage remains a factor. Recently, total open interest has fallen sharply, reaching multi-month lows as traders exit speculative positions amid heightened volatility and price consolidation. In the past 24 hours alone, over $570 million in positions were liquidated, mostly impacting short sellers. This wave of liquidations triggered a significant short squeeze, fueling Bitcoin’s price recovery. Analysts note that funding rates have normalized, suggesting a healthier market structure, but uncertainty remains about whether the short squeeze is over or if further volatility is ahead.